Investors in and operators of greenhouse gas installations — installations which fall under the scope of the 2003 European Commission (EC) Directive establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (the EU Emission Trading Scheme (ETS) Directive) — are worried. And they should be. At the beginning of last month, the EC adopted all 27 decisions relating to member states’ NAPs for the 2008-12 period. Most of the EC’s NAP decisions require member states to introduce changes to their NAP, whether in the total quantity of allowances or in other allocation provisions. According to the measures given in the decisions, member states need to implement such changes “in a non-discriminatory manner and notify the Commission as soon as possible, taking into account the timescale necessary to carry out the national procedures”.
Belgian climate change policy
In
With regard to the transposition of the EU ETS Directive, and given the division of powers in
In respect of the European burden sharing agreement (see Council Decision 2002/358/EC of 25 April, 2002, concerning the approval, on behalf of the European Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the joint fulfilment of commitments thereunder), with regard to the fulfilment of the Kyoto Protocol, the Belgian reduction objective for the emission of greenhouse gases was set at 7.5 % below the emissions of 1990. This reduction objective must be complied to within the period 2008-12. This means that according to the second Belgian NAP,
The total amount of emission allowances which will be allocated to Belgian greenhouse gas installations in the period 2008-12 is the sum of the emission allowances allocated to industrial greenhouse gas installations, the emission allowances allocated to the greenhouse gas installations for energy production and the emission allowances provided for in the reserve for new entrants 2008-12.
The total Belgian allocation for the period 2008-12 equals 315.7 megatons of CO2. The average yearly reduction in the period 2008-12 due to EU ETS in the Belgian greenhouse gas installations will account for 8.24 megatons of CO2 towards the Belgian Kyoto target, compared to a ‘business as usual’ projection. This reduction contributes 27% to the total Belgian reduction effort for achieving the
Thus, the Belgian greenhouse gas installations depend on those 8.24 megatons of CO2, because these targets were already ambitious and making green investments requires a high level of charges, time and investment. Further, according to a press release from the Belgian Federation of Enterprises dated 28 November, 2007,
The EC challenge
In its decision of 16 January this year, the EC stated that Belgium’s second NAP for the commitment period 2008-12 contravened criterion one of Annex III of the EU ETS Directive because the intended total quantity of allowances to be allocated would be inconsistent with achieving Belgium’s commitment under Decision 2002/358/EC and the Kyoto Protocol. The total quantity of allowances is considered to be more than is likely to be needed under the strict application of criterion one because
The EC was even more demanding towards several Eastern European countries, such as Hungary, the Czech Republic, Latvia, Estonia, Slovakia and Poland, because, in the view of the EC, these countries were highly over-allocated and therefore it decided to reduce the allowances by 30%-47%. In addition to these member states, several Slovakian and Polish greenhouse gas installations lodged appeals against the decision of the EC before the European Court of First Instance. So far, the Court declared appeals lodged by private entities inadmissible because of a lack of direct and individual concern. Only the UK (see T-178/05, 23 November, 2003; concerning rejection of proposed amendments to the NAP) and Germany (T-374/04, 7 November, 2007, concerning measures for ex-post adjustments of the amount of allowances allocated to greenhouse gas installations) were ever successful in attacking the EC’s decision concerning the NAP, each for specific reasons.
Some might argue that
It is evident that a cleaner world is a necessary, but costly, investment.
Marijke Schurmans is a senior associate in the litigation and regulatory practice at DLA Piper in